Here's Why You Should Retain Bruker (BRKR) Stock for Now
Bruker Corporation BRKR is well-poised for growth in the coming quarters, backed by the robust growth of its BioSpin Group across its full portfolio. In the last reported quarter, CALID group’s organic revenues increased in the low 20%, along with very strong bookings of the timsTOF platform. Bruker NANO's academic, industrial and GreenTech Research and high-end semiconductor metrology revenues remained strong. However, competitive space and foreign currency fluctuations are worrisome for BRKR.
In the past year, this Zacks Rank #3 (Hold) stock has increased 0.1% against the 10.2% fall of the industry and an 11.5% rise of the S&P 500 composite.
The renowned medical device company has a market capitalization of $10.14 billion. Bruker projects a long-term estimated earnings growth rate of 18.2% compared with 13% of the industry. BRKR’s earnings surpassed estimates in all the trailing four quarters and was break even in one, delivering an average surprise of 10.9%.
Let’s delve deeper.
Upsides
Strong Prospects of BioSpin: In the first quarter of 2023, BioSpin Group’s revenues grew in the high-teens percentage on a constant-currency basis despite any gigahertz-class revenues in the first quarter. BioSpin saw robust growth in revenues across its full portfolio, including NMR and MRI preclinical imaging.
Meanwhile, Bruker received two orders for 1.2 gigahertz NMRs in the first quarter, which will be placed at the University of Warwick and the University of Birmingham, United Kingdom. The systems are used for structural and functional biology and life-science research, GreenTech and materials research. With both institutions already having Bruker 1.0 GHz NMR spectrometer, the latest move highlights the expansion of fundamental research infrastructure in the UK.
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CALID Group Holds Potential: In the first quarter, the constant-currency revenue growth of Bruker’s CALID Group was supported by strong life science mass spectrometry and vibrational spectroscopy businesses.
The timsTOF platform continued its adoption in 4D proteomics, epiproteomics and multiomics. The company had excellent year-over-year growth in bookings and announced further key enhancements to advance capabilities.
BSI Nano Group’s Prospects Look Bright: In the first quarter, Bruker Nano’s revenues grew in the low 20% on a constant-currency basis. NANO's academic, industrial and GreenTech Research and high-end semiconductor metrology revenues remained strong. Revenues for advanced X-ray and Nano Surfaces tools also delivered strong growth in the quarter.
Further, NANO's microelectronics and semiconductor metrology tools performed well with strong bookings and backlogs.
Downsides
A Competitive Landscape: Bruker faces substantial competition in a consolidating industry and expects the competition across its markets to increase further. Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin faces a competitive threat from Perkin Elmer, Visualsonics (Fuji Film) and others.
Unfortunately, many of Bruker’s peers have expanded their market share in recent years through business combinations. Other companies may also choose to enter Bruker’s fields of operation in the near future.
Exposed to Currency Movements: Bruker conducts 80% of its business in international markets. As a result, currency fluctuations continue to result in foreign currency transaction losses at the company. In addition, this could cause the price of Bruker’s products to be less competitive than its principal competitors' offerings.
Estimate Trend
The Zacks Consensus Estimate for Bruker’s 2023 earnings per share (EPS) has remained constant at $2.58 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.86 billion. This suggests a 12.8% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Zimmer Biomet ZBH, Haemonetics HAE and McKesson MCK.
Zimmer Biomet has an earnings yield of 5.35% compared to the industry’s -3.65%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. Its shares have increased 26.9% compared with the industry’s 0.9% increase over the past year.
ZBH carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics, carrying a Zacks Rank #2 at present, has an earnings yield of 3.85% against the industry’s -3.65%. Haemonetics’ shares have risen 26.8% compared with the industry’s 0.9% increase over the past year.
HAE’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.21%.
McKesson, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 14.33% for the next year. Shares of MCK have risen 17.6% compared with the industry’s 15% growth over the past year.
MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.48%.
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